Ex-Financial Times Journalist Tom Foremski @ the Collision of Technology and Media

24

January

2010

|

01:01 AM

America/Los_Angeles

The Red Herring Of Web Site Traffic Numbers - Counting The Wrong Metric

Mathew Ingram has done a nice job summarizing this weekend's tempest in a tea cup among Jason Calacanis, Mike Arrington, and Fred Wilson, the East Coast VC, over web site traffic metrics provided by Comscore.

Mr Calacanis is upset Comscore wants to charge thousands of dollars to provide accurate web site traffic reports, while acknowledging that their free version is inaccurate.

He says it's a form of blackmail because media buyers buy advertising according to Comscore's traffic rating -- if Comscore under reports your traffic because you won't pay for their more accurate premium service -- you lose money. He has a point.

Foremski's Take: The arguments over site metrics is quite educational. I found out about the many different traffic counting methodologies, and the tricks that sites use to inflate their numbers.

But the heated debate over how to measure traffic, is, ultimately, a red herring. It's not the traffic that matters it's the advertising conversions.

Today, may advertisers still buy media based on a site's traffic but that's not the trend. Advertisers are increasingly able to measure their conversation rate -- and that becomes the number they measure.

That's the number that means something regardless of how total traffic is counted.

It doesn't matter if Comscore says your site's traffic is twice as large as it did before -- if your advertisers can't convert that traffic to sales then your site might as well have no traffic at all.

Media companies are in a tough spot...

Advertisers have so many ways to optimize their media buys. They are becoming more and more efficient at placing ads in the right places at the right times and getting the best price for those ads.

Media companies don't have that same leverage.

That's why advertising will become a less important revenue stream for most media brands.

Baked beans...

The future media business model will be what I call a 'Heinz 57' model: many multiple revenue streams.

Some of it will be advertising, some of it will be paywalls, sponsorships, virtual currencies, lead generation, events, and more...

It will be tough to manage all those revenue streams but that's what will sort out the competitors from each other. Publishers won't be able to lunch out with key customers -- they'll have to stay at their desk managing many relationships, and many sources of revenues, in real-time. Their job is going to get a lot harder.